John Prescott said: "A successful bid for the 2012 games would accelerate the delivery of new homes and jobs in London. "The Olympics is not just about athletics… The Olympics will be the catalyst for regeneration. It isn't just the north of England that has deprived areas, we have these in the south - and that means we need investment in the infrastructure."

The chancellor doubled the stamp duty threshold from £60,000 to £120,000 in a move yesterday to help homebuyers struggling to get on the property ladder. Stamp duty now kicks in at 1% on property prices over £120,000. Below that, sales are tax-free.

This is the first time the starting threshold for stamp duty has been raised for twelve years. The Treasury said the change was aimed at cutting the number of first-time and low-income buyers paying the duty, and "improving the efficiency of the housing market".

It will free an estimated 300,000 homebuyers from the duty each year and save each of them up to £1,200 in a move accountants KPMG said would cost the exchequer £250m in 2005-06.

However in London, the new threshold is expected to make little difference to the property market. A recent survey conducted by Rightmove reveals that just 2% of homes in London and 7% of those in the south-east were on the market for less than £120,000. Buyers in the north of Britain is the main beneficiaries.

Parliamentary Under-Secretary of State Yvette Cooper said: "We will continue to monitor the situation and retain the option to legislate in future if necessary, but we do not propose to legislate against upward-only rent review clauses at present."

"We intend to undertake a review of the law of assignment and subletting, with the aim of easing the position for tenants while not jeopardising property investment, including looking at legislative options," she said.

The British Retail Consortium had been leading the charge for a ban on upward-only rent reviews. Director-general Kevin Hawkins said: "We particularly welcome the Government's commitment to review the law on assignment and subletting and to retain the option to legislate on upward-only rent reviews in the future. In the meantime, the property industry's performance will be under close scrutiny."

RICS, the NFRL and NAEA have won a court ruling, overturning the Houses in Multiple Occupation (HMO) legislation, which was introduced by the Northern Ireland Housing Executive last year. The proposed law would have made landlords of HMOs accountable for the behaviour of tenants and their guests, not only within the landlord's property, but also in the public street.

HMO's are effectively houses comprising tenants who do not make up a single household. The sector is mainly made up of flats rented to students and young professionals.

Chartered Surveyor Gordon Jackson said: "This legislation made the landlords of houses in multiple occupation, normally student accommodation, accountable for the behaviour of tenants and their guests, not only within the boundaries of the landlord's property, but also in the public street. The measure would have not only forced those who manage HMOs out of the market and prevented many from entering the market, it would also have had a very negative effect on property values. We believe it would also have had a detrimental."

A top investment bank today warned that house prices in the UK are set to drop by 7% over the next three years. The bank also predicted that there is now a one in four chance of an early nineties-style crash to the property market.

Lehman Brothers said a global economic downturn, tax increases and a sharp rise in mortgage repossessions could send prices plummeting by up to 17%.

Lehman's UK economist, Alan Castle said: "House prices are about 15% overvalued. Our central forecast projects falling house prices and a sharp slow down in consumption growth."

He added: "In normal terms, house prices fall back gradually, although the volatility of the data could well mean a few months of falls being followed by a small gain. In cumulative terms we judge that prices may fall by 7% between now and end 2007."